FDIC Federal Register Citations

Melissa Eagles
270 Main Street
Southbridge, MA 01550

October 4, 2004

Robert E. Feldman

Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429

Dear Robert Feldman:

I am a community banker and I wish to express my strong support of the FDIC’s proposal to increase the asset size limit of banks eligible for the streamlined small-bank CRA examination to $1 billion. I also strongly support the elimination of the separate holding company qualification.

The proposal will greatly reduce regulatory burden for community banks eligible for the smaller institution examination without weakening our commitment to reinvest in our communities. Reinvesting in our communities makes good business sense. Making these regulatory exams more streamlined will not change the way community banks do business or reduce the volume of loans. Rather, it will free up human and financial resources that can be redirected to the community and used to originate loans and provide other services.

Under the more streamlined CRA exam, community banks would still be required to lend to all segments of their communities, including low-and moderate-income individuals and neighborhoods and would continue to be evaluated by their regulator for compliance. The regulation, if implemented will decrease regulatory burden in terms of both cost of compliance and the man-hours needed to comply with the current large bank procedures. It is unfair to evaluate a $500 million or $1 billion bank using the same exam procedures as those used for a $100 billion or $500 billion bank.

The addition of a community development criterion to the small bank examination for those banks over $500 million in assets is a significant improvement over the present investment test. It is often extremely difficult for small banks to find investments which meet the qualified investment test and which are located in their own communities. As a result, many community banks (especially those in rural areas) have to invest in statewide or regional projects to meet CRA requirements. These investments actually take resources away from the bank’s local community. Also, the community development criterion should not be a new stand alone test but part of the evaluation of a bank’s overall lending to the community.

The FDIC’s proposed changes to CRA are a vitally important step in revising and improving the CRA regulations and in reducing regulatory burden. While community banks will still be examined under CRA for their record of helping to meet the credit needs of their communities, the expanded small bank test will eliminate some of the most problematic and burdensome elements of the current CRA regulation for community banks that have been subject to a myriad of new regulations in recent years.

Thank you for considering my views.

Sincerely,
Melissa M. Eagles